SHARES in Chinese mainland fell to one-month low yesterday, dragged down by a lackluster performance in the banking and brokerage sectors after the bank regulator decided to write-off bad loans in earthquake-hit areas.

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, opened lower in the morning and lost 3.13 percent, or 108.55 points, to 3,364.54 at 3pm yesterday.

Turnover shrank to 67.2 billion yuan (US$9.7 billion) during the same period compared with the 76 billion yuan in earlier session. Losers in the Shanghai bourse outnumbered gainers 649 to 140.

Meanwhile, the Shenzhen Composite Index, which tracks the smaller domestic stock exchange, was down 2.90 percent, or 30.47 points, to 1,021.57.

China Banking Regulatory Commission has ordered the nation's commercial banks to write-off bad loans related to the deadly earthquake in Sichuan Province. This may involve millions of dollars.

The measure, aimed at reducing the debt burden of disaster victims, also generated market concern that it will hurt banks' profits.

Industrial & Commercial Bank of China, the nation's largest commercial bank, yesterday declined 3.01 percent to 5.81 yuan while Bank of Communications dropped 3.10 percent to 8.74 yuan. Huaxia Bank dived 6.14 percent, or 0.74 yuan, to 11.32 yuan.

"The rebound of the overall market weights heavily on blue chips, especially the banking sector," said Wu Binghua, an analyst from Tebon Securities Co Ltd yesterday.

Citic Securities Co led a drop among brokerages yesterday on concern over lower trading value.

China's biggest publicly traded brokerage slid 5.51 percent to 31.55 yuan while Haitong Securities Co retreated 9.98 percent to 21.01 yuan.

Petro China Co Ltd suspended trading after it announced it had received 12.3 billion yuan in government subsidies.

Other blue chips also pulled the index down. China Life Insurance Co, the nation's biggest insurer, buckled 5.09 percent to 28.51 yuan while Ping An Insurance Co slid 5.22 percent to 52.88 yuan.